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COVID-19 and LIBOR Transition: Taking a Market-led Approach

Keeping LIBOR transition plans on track despite the COVID-19 pandemic

The impact of COVID-19 on financial services has been considerable, affecting different lines of business and functions. Likewise, the impact of COVID-19 on LIBOR has been significant, resulting in a great deal of volatility in the LIBOR market. However, regulators have reiterated the unavailability of LIBOR as a benchmark rate post 2021. This means that even as banks scramble to prevent service disruption, their LIBOR transition plans will need to continue on track. To minimize the COVID-19 impact on LIBOR transition, banks must review a few aspects that are intrinsically linked. These include:

Analyzing changes to current LIBOR exposures per asset class

Reassessing product inventory to understand the impact of COVID-19 volatility on performance

Defining a systematic transition plan

Establishing a robust rates strategy

The COVID-19 impact on LIBOR transition is largely stemming from market volatility and changes in the regulatory landscape. However, a systematic transition is key to financial stability and banks must take appropriate steps to ensure the same.